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Here's What You Should Like About Amazon's Latest Smart-Home Move

The purchase of smart doorbell maker Ring adds another strong piece to its growing ecosystem.

In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Total Income's Ron Gross process the latest news in the smart-home sector: Amazon.com (NASDAQ:AMZN) is paying $1 billion for smart doorbell specialist Ring. Among other things, this gives the e-commerce giant a more direct and secure route to getting your packages inside your front door, rather than sitting out on your doorstep awaiting pilferers. It's all part of what will soon be a real Amazon ecosystem.

The question is this: Will future smart-home components be ecosystem-agnostic, or will it be more like the Apple (NASDAQ:AAPL) vs. Android battle?

A full transcript follows the video.

This video was recorded on March 2, 2017.

Chris Hill: Big news this week in the smart-home industry. Amazon is buying Ring, a smart doorbell maker, for $1 billion. Matty, what are we going to do there? Is Amazon going to connect the Echo to the front door now? Is that the move here?

Matt Argersinger: Yes, I think so, down the road. This solves something that's really important to a lot of people, which is the front door issue. I want packages, I want deliveries from Amazon or other e-commerce companies, and I just want to know who's bringing my package, when it arrives, who's there, before I potentially let that person into my home. And I think this really takes that to another level. Amazon has made some acquisitions to do this, with their Key, their Blink. But Ring has a great reputation for security. I think that solves that problem.

To your larger point, this is all becoming an ecosystem. Amazon now has the front door, it has the Alexa Echo platform inside the home, which can do a variety of different things. I feel like we are one step closer now to the future of, not just someone just coming to your house and delivering stuff, but my refrigerator now knowing when I'm out of lettuce or ketchup or mustard and ordering that, and it's automatically restocked. Or my AC system ordering filters when the filters go bad and replacing them.

Ron Gross: Well, I'm on board for that. Sign me up.

Argersinger: We're one step closer. I think this is another brilliant acquisition by Amazon in a string of them.

Jason Moser: Yeah. A time ago, doorbells probably held a little bit of a different status for the household. Today, it's interesting to see the research, Millennials apparently aren't really big fans of the doorbell, it kind of scares them. So, they do a lot of texting. "Hey, I'm here, come on out." And I get that.

Gross: [laughs] They need to toughen up a bit.

Moser: I think this is beyond the doorbell, though. It makes for a very simple security solution, particularly with the Echo Show. You link up the doorbell to the Echo Show. Now, you're in the kitchen, you have a clear look as to what's going on in your front yard, which dog is digging the hole out in my front yard, and what neighbor's dog is leaving those gifts in my front yard, or whatever it may be. I think it's a very simple security solution.

Hill:Google is working on their own version of this. And for a long time, when it came to smartphones, one of the things that we have all talked about is the ecosystem in the iPhone, and, the more that Apple can tie people into iTunes, the more they can get them in this ecosystem, the less likely they are to switch to a Samsung phone or any other phone. Are we moving that way in the home as well? Granted, we're not there right now. But 10 years down the road, are homeowners going to have to decide, what kind of smart home do I want? Do I want an Amazon, or ... Are all of these devices going to work together? Or are they going to have to decide, if you want the Ring, you have to have an Echo inside, as opposed to a Google Home working with a Ring.

Moser: I'll speak from experience here. We have the Echo in the house, we have a Nest thermostat, I have a different provider of lights controlling lights. I think what you're going to see is this big focus on the actual central control, whether you're going with Google or Amazon. Generally speaking, I don't think those companies are as interested in drawing lines and creating that walled garden. I think it's better for consumers and for those companies to have stuff that interacts with different operating systems.

The flip side of that is, you look at a company like Control4, which is a company we've talked about a number of times here, they sell the same kind of stuff, but their MO is this operating system. And I think they may be the ones that really feel the most pain here. Control4 is kind of an all-or-nothing solution. It's for the higher-end home, and I don't know that consumers are really ready for that, or even, when they're ready, that they're going to be willing to spend that much money on it. So, I'm going to be very interested to see how Control4 approaches the situation with Amazon and Google making such big investments.

Gross: I think there are already some ecosystems in the home, Verizon comes to mind. Verizon has my internet, my cable, my phone, and switching costs are not very fun. It's kind of sticky there. It'll be interesting to see if those companies that are already embedded in the home want to expand that ecosystem out, if there are alliances, joint ventures, acquisitions as a result.

Hill: By the way, shout-out to the founders of this small company that just got acquired by Amazon for $1 billion, because back in 2013, Ring appeared on the CNBC prime time show Shark Tank. At the time, the company's name was Doorbot. So, first of all, kudos for coming up with a better name. They wanted $700,000 for a 10% stake in the company, and the panelists on Shark Tank said, "No, thank you." Jason, do I have the math right on that, that that would have worked out pretty well, if they had said, "Sure, here's $700,000." 10% of a billion ... yeah, I think that --

Moser: It's just a lot, like you said.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Amazon. Jason Moser owns shares of Apple. Matthew Argersinger owns shares of Amazon and Apple. Ron Gross owns shares of Amazon and Apple. The Motley Fool owns shares of and recommends Amazon, Apple, and Verizon Communications. The Motley Fool owns shares of Control4 and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.